What is money?

A wide variety of forms of money are used in the world
today. Each of them
has a different history.

Banks and governments store their reserves as ingots of gold.
Loose change jingles in our pockets and purses. Banknotes and
cheque books provide a light-weight, convenient alternative
spending-power. Increasingly, however, we are entering a 'cashless
society' where plastic cards provide instant credit and money can
be moved between bank accounts over the Internet.

What makes something valuable?

Why are certain objects valued and used as
money? What makes them suitable for this purpose? We can never
answer these questions completely. In some cases it may be a social
reason connected with a particular society's idea of attractiveness
and value. For others there may a religious or philosophical reason
behind the form chosen.

In most cases, the object valued is limited in
its supply, and the value might be linked to the difficulty in
obtaining or making the object.

Some forms of money have been valued for their
beauty. Examples include those made from precious metals, shells
and feathers. Feathers were used as money on some of the islands in
the Pacific Ocean, and certain colours were especially popular. The
feathers were sometimes sewn into rolls which could be used to make
important payments. These were especially valued as they could be
used in personal adornment and the display of wealth.

Shells have been used as currency in many places
around the world. Cowrie shells were first used in China, where
records of their use as gifts date from the thirteenth century
BC. The use of cowries spread to other areas and this
included their movement along Arab trade routes into parts of
Africa, where they were often used for decoration.

Shells were also valued in other parts of the world including
North America and some of the islands of the Pacific Ocean.

Practicalities

There are also
practical reasons for money taking particular forms. Cowrie shells
are portable and durable, just as metal coins are. Animal skins
used in trade could be worn for warmth. Food has always
been valuable as we need it to survive.

Value is also linked to availability. Feathers and skins could
only be obtained through hunting, making their collection
difficult. Precious metals were hard to find and difficult to
extract. Cloth has also been used in many places around the world
as money, with the intricacies of production often having an effect
on the its value.

On the Island of Yap,
large stones were brought from an island many miles away,
which was very dangerous for the people manning the
boats. They were greatly valued, but would change ownership often
without moving from where they stood.

Paper money was first used in China as the ‘cash’ coins in
circulation were too heavy for large transactions, especially when
trade was conducted over long distances. The regional differences
in the use of money also caused problems for traders. The
earliest surviving note is the great Ming circulating treasure
note, bearing an image of coins to indicate its value.

Metal shapes

Metal currency has not always taken the shape of small round
coins. Although today coins essentially look the same across most
of the world, they developed differently in the east and the west.
In China the earliest coins were made in the shape of valuable
tools, including knives and spades.

Different shapes were made in different areas.

By 210 BC, when China was united under the
First Emperor, Qin Shi Huangdi, a regular coinage was enforced.
From this point, Chinese coins were all one shape, a circular coin
with a square hole in the centre. Chinese ideas spread and
similarly shaped coins began to be used in Japan, Vietnam, Korea
and Uzbekistan. This shape continued to be used in China until the
early twentieth century.

The shape of the Chinese ‘cash’ coin was
practical as the coins were low value and could be strung together
for making payments. There is also a much more symbolic reason for
the shape.

In ancient times, the Chinese believed that
the earth was square and heaven was domed. The emperor was thought
of as an agent who could communicate between heaven and earth. By
making the coins this shape, the emperor was reinforcing his place
in the system.

It was not just in China that money was made in shapes that seem
usual to us today. Kissi pennies were used in Liberia and Sierra
Leone in Africa until the early twentieth century. They seem to be
an extraordinary shape, but they are, in many ways, very practical.
The shape is made through twisting, hammering, working into a blade
and drawing the metal into points. If the iron can be worked in
these four ways, it is proved to be good quality.